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11 January 2017

Reuters: Brexit adds to caution on LSE, Deutsche Boerse merger: Draghi

The European Central Bank needs to carefully analyze a proposed merger between London Stock Exchange Group (LSE.L) and Deutsche Boerse (DB1Gn.DE), particularly given Britain's decision to leave the EU, ECB President Mario Draghi said.

"When a merger leads to a change in ownership of a euro area bank, as could be the case for entities within Deutsche Boerse and LSE Group that are licensed as banks, the ECB has to analyze it carefully from a prudential perspective," Draghi said in a letter to a member of the European Parliament.

"The United Kingdom's withdrawal (from the EU) may lead to a loss of oversight and supervision of UK central counterparties by the ECB," Draghi added. "Thus, it will be important to find solutions that at least preserve, or ideally enhance, the current level of supervision and oversight."

Deutsche Boerse and LSE have been working to overcome regulatory hurdles holding up their $28 billion merger as the European Commission has expressed antitrust concerns, particularly in the case of clearing of derivatives contracts.

A major hurdle to the merger is how antitrust regulators define the derivatives market.

Deutsche Boerse is hoping that the European Commission will treat over-the-counter (OTC) derivatives contracts and on-exchange traded derivatives as two separate markets, sticking to a market definition the Commission confirmed back in 2012.

Full news

© Reuters

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